Forward power prices are on the rise and Real-time (market index) prices still show volatility. Energy consumers became complacent in a backward dated market where near-term prices were higher and decreased over longer periods of time in outer years, offering great savings opportunities given where current market prices are at this point in time.
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The market is currently in a Contango market state, where the future prices of a commodity are higher than the near-term prices as depicted in the graph above. As a result, a short term contract that begins at the prompt month, will have a lower price compared to a longer term contract, all things being equal.
*Texas Senate Bills 6 & 7 passed last week. SB 6 would direct the State to use taxpayer funds to solicit bids to build up to 10 GW of new natural gas-fired generation n the state, which would power approximately 2 million homes. This generation would be reserved for days when demand levels are high and a potential for emergency conditions. This also represents a costly tax on consumers.
*SB 7 encourages more generation in ERCOT that could start up and be online within 2 hours and run for at least 4 hours. This would essentially be a new ancillary service that would be fulfilled by either quick-start natural gas combustion turbines or battery technologies. Texas could have more battery capacity than California in the next 1-3 years.
*Excerpts from Constellation Energy Market Update
